ECON 213 InQuizitive ch. 12 Liberty University Solution

Chapter 12: Monopolistic Competition and Advertising

In the short run, low barriers to entry and exit allow new entrants into a monopolistically competitive market.

What are the characteristics of monopolistic competition?

Which shift in the demand curve is most likely to describe a company in a monopolistically competitive market that begins to spend more on advertising?

Which of the following are reasons a firm might choose to advertise?

For each industry, drag the label into the column of the table that describes what type of market it is.

What might be the consequences of government intervention in the bottled water industry?

Which graph likely represents a popular designer sunglasses company located in a busy, downtown shopping mall?

How does advertising affect industries in competitive markets? Fill in the blanks to complete the passage.

In monopolistically competitive markets, government regulation is always desirable because it improves efficiency.

What does a shift from point 1 to point 3 illustrate about the result of advertising in monopolistically competitive markets?

How does advertising affect consumers? Fill in the blanks to complete the passage.

In which market type(s) are individual firms likely to advertise regularly?

When are firms more efficient? Order the following firms from least efficient to most efficient.

How do the actions of the Federal Trade Commission influence advertising?

A pizza company that charges five dollars more for its pizzas than a competitor’s pizza will find it impossible to survive in a monopolistically competitive market.

Drag the industries to the graph that would best represent them.

Drag the following products to the graph that most likely illustrates their price and output.

Katy owns a monopolistically competitive firm that has many competitors that advertise. What can Katy realistically hope to achieve if she decides to advertise as well?

Match the description of the industry to the type of market in which it belongs.

What are some of the differences between a monopolistically competitive firm and a competitive firm?

Ananya is the owner of a toy store and is considering whether or not to purchase advertising for her company. The graph here illustrates the firm’s long-run average total cost curve in three different scenarios. Drag each situation to the appropriate point on the graph.

Order the industries based on increasing market power and ability to set prices, starting with the highest.

Advertising expenses occupy approximately what percentage of global economic activity?

Match each type of market to a possible incentive or disincentive for advertising in it.

Mrunal opened the first flower shop in her town. For a while, she was the only provider of flowers, until people noticed how profitable her business had been. Now several new flower shops have opened. What might happen to Mrunal’s business in the long run?

Identify each situation as either a competitive market or a monopolistically competitive market.

Fill in the blanks to describe the characteristics of monopolistic competition.